Written for owners of restaurants, cafes and coffee shops, bars, takeout and delivery kitchens, food trucks and bakeries with seating in the US, with state detail for California, Texas, New York and Florida.
The short version
- Set aside sales tax and withheld payroll tax.Move them to a separate account as you collect them. That money is the state's and the IRS's, and you can be personally liable.
- Book gift cards as meals you still owe.Record them as deferred revenue and hold a reserve. January and February redemptions arrive with no cash behind them.
- Annualize any merchant cash advance before signing.Turn its cost into a yearly rate and work out how long repayment takes. Compare an equipment loan first.
A restaurant's bank balance flatters it. Card settlements land every day or two, but part of that money is sales tax you collected for the state, payroll tax you withheld from your team, and gift card balances you still owe as meals. Spend it and the bill comes back later, sometimes to you personally.
Trust money
Sales tax collected is the state's money held in trust, and responsible officers can be personally liable for it; every state has similar rules. Withheld payroll taxes are trust fund taxes, and the IRS can assess the full amount against any responsible person who willfully fails to pay them.
New York Tax Law 1131(1) and 1133; IRC 6672
If you have already spent it, file the return on time anyway, pay what you can, ask the state for a payment agreement, and start sweeping sales tax into a separate account every day.
Build the 13-week model
- Start from the bank.Opening balance and the minimum you will not go below.
- Receipts by channel.Card settlements (usually 1 to 2 business days), cash, delivery platform payouts (weekly) and event deposits.
- Payments by due date.Payroll and tips paid out, vendors by terms, rent, sales tax, payroll tax deposits, loan payments and card fees.
- Keep trust money apart.Move sales tax and withheld payroll tax to a separate account as you collect them, so they never fund a slow week.
Payroll tax deposits
Deposit monthly, by the 15th of the next month, or semiweekly, depending on your lookback period, with deposits rolling to the next business day. Late deposits cost 2% up to 5 days late, 5% at 6 to 15 days and 10% after that. As of Oct 2026.
IRC 6656
| Payroll tax deposit | $18,000 |
| Failure-to-deposit penalty at 5% | $900 |
| Owed, before interest | $18,900 |
The owner now moves payroll tax into a separate account on each payday. As of Oct 2026.
A gift card is a meal you still owe. The cash came in once; the food and labor to serve it come later.
Gift card rules
No expiry within 5 years of issue or last load, and no dormancy fee before 12 months of inactivity. California bans expiry dates and requires cash back on balances under $10. Unredeemed balances may be reportable under state unclaimed property law. As of Oct 2026.
Credit CARD Act, 15 U.S.C. 1693l-1; 12 CFR 1005.20; Cal. Civ. Code 1749.5
Before you take a merchant cash advance
A merchant cash advance is priced with a factor rate and repaid from a share of your daily card sales. Convert it to an annualized cost before you sign. In California (offers of $500,000 or less) and New York (up to $2.5 million) the provider must give you APR-style commercial financing disclosures. As of Oct 2026.
| Cash advanced | $50,000 |
| Cost at a 1.35 factor rate | $17,500 |
| Repaid from 15% of daily card sales | $67,500 |
At about $2,500 a day of card sales, 15% is $375 a day, so repayment takes 180 business days: $17,500 of cost, 35% of the advance, in under a year. Because repayments start right away, you never have the full $50,000 for the whole period, so the annualized cost is well above 35%. The owner compares an equipment loan first. As of Oct 2026.
If you plan to fund a second location with an SBA loan, check ownership first. For applications receiving an SBA loan number on or after October 1, 2026, SBA SOP 50 10 8.1 requires each direct and indirect individual owner to be a US citizen or US national whose principal residence is in the United States, its territories or possessions, and lawful permanent residents may not own an interest. As of Oct 2026.
Asked in Greymill
To repay: $50,000 x 1.35 = $67,500
Cost: $67,500 minus $50,000 = $17,500, or 35% of the advance
Daily take: 15% of $2,500 = $375
Time: about 180 business days ($67,500 / $375)
The catch: 35% is not a yearly rate. Repayments start right away, so you never have the full $50,000 for the whole period. As a yearly rate, the cost is well above 35%.
Before you sign: price an equipment loan for the cooler. In California and New York, the provider must give you APR-style disclosures on an offer this size, showing the cost as a yearly rate (As of Oct 2026).
Want both options side by side in a 13-week cash model?
Ask it about your own business
Paste this into Greymill with your own figures, and Cash & Profit works it through for your business.
I run a restaurant, cafe or bar in [state], in the US. My bank balance is [amount] and my minimum is [amount]. Weekly net sales are about [amount] by card, [amount] in cash and [amount] from delivery platforms. Payroll is [amount] every [week or two weeks], I deposit payroll tax [monthly or semiweekly], file sales tax [monthly or quarterly], rent is [amount], and I have [amount] of gift card balances outstanding. Build me a 13-week cash model with trust money kept separate, and show the tightest week.
More for restaurants, cafes and bars in the US
- Pricing a plate to a food cost target and knowing your breakeven coversSet menu prices from plate cost, judge dishes by dollars of contribution, watch prime cost, and show any mandatory fee the way your state requires.Read the lesson
- Claiming the FICA tip credit and taxing service charges correctlyYou pay payroll tax on your servers' tips and can claim most of it back through the 45B credit, while a mandatory service charge changes both your sales tax and your payroll.Read the lesson
- Opening, buying or keeping a liquor license, and staying clear of dram shop claimsThe permits around a liquor license, how a transfer works when you buy a licensed business, and what server training and your state's dram shop law mean for your risk.Read the lesson
- Buying a restaurant or signing a lease without inheriting someone else's debtsThe lease, vendor and purchase terms that sink restaurants, and the notices that stop a buyer inheriting the seller's unpaid sales tax.Read the lesson
- Paying servers right: tip credits, tip pools and service charges in your stateYour state, and sometimes your city, decides the tipped wage, who can share the pool and how a service charge is paid, and mistakes come back with liquidated damages.Read the lesson
- Winning direct orders and better reviews without overpaying the delivery appsGrow the channels you control, check what each platform really costs you, and ask for reviews in a way the FTC allows.Read the lesson
- A failed inspection, an allergic reaction or an incident after drinks: the first 24 hoursWhat to fix, keep and say, and who to call, when an inspector, an allergic guest, an injured third party or a demand letter puts the business at risk.Read the lesson
Open the interactive lesson · Every restaurants, cafes and bars lesson · What Greymill knows about the trade
Sources
The primary sources behind this lesson, checked Oct 2026.
- SOP 50 10 8.1, effective October 1, 2026, section A, chapter 1, paragraph F and Appendix 3 (Cash, funding, bookkeeping and software)
- Fin. Code 22800 to 22805; NY Fin. Serv. Law 801 to 812 (Cash, funding, bookkeeping and software)
- CPLR 3218 (2019 amendment) (Cash, funding, bookkeeping and software)
- SBA 7(a) terms, maximum interest rates; Fed H.15 bank prime loan (Hard cases: cash and funding)
- Cal. Code Regs. tit. 18, 1603(c), 1603(h) (Sales tax on meals and mandatory CHARGES)
- Tax Law 1105(d) (Sales tax on meals and mandatory CHARGES)
- Fla. Admin. Code rule 12A-1.0115(9)(a); TAA 98A-008, Conclusions of Law (Sales tax on meals and mandatory CHARGES)
- Fla. Stat. 509.214(1)(b), (2) to (4) (Sales tax on meals and mandatory CHARGES)
- R.C. 5751.01 as amended by HB 33 (Sales tax on meals and mandatory CHARGES)
- 2025 Form 8846 instructions, Who Should File, How the Credit Is Figured, Lines 2 and 4 (Federal income and payroll tax for restaurants)
- IRC 179(f) (Federal income and payroll tax for restaurants)
- FTB 3885 instructions; R&TC 17201, 24356 (Federal income and payroll tax for restaurants)
- IRC 199A(d)(2) (Federal income and payroll tax for restaurants)
- Publication 15 section 11; IRC 6656, 6672 (Hard cases: tax)
- 16 CFR Part 464 (Surcharges, service charges and price display)
- Gen. Bus. Law 518 (2024 amendment) (Surcharges, service charges and price display)
- 12 CFR 1005.20; 15 U.S.C. 1693l-1 (Surcharges, service charges and price display)
- 16 CFR 465.2 and 465.4 (Surcharges, service charges and price display)
- 15 U.S.C. 45b (Surcharges, service charges and price display)